20VC Brex's Henrique Dubugras on Advice from Evan Spiegel and Eric Schmidt on CEOship, The Biggest Hiring Mistakes When Scaling, What Everyone Gets Wrong with Product Messaging and When is the Right Time to Launch Secondary Products

In this engaging conversation on 20vc, host Harry Stebings reconnects with Henrique Dubugras, the founder and CEO of Brex, to explore the company's evolution and Henrique's personal growth since his previous appearance. Henrique shares insights into Brex's mission to reimagine financial systems for growing companies, having raised over $1.1 billion from top investors and serving as a board member at Mercado Libre. The discussion delves into leadership styles, the importance of authenticity, and learning from people rather than books, highlighting Henrique's journey with ADHD and self-acceptance. They also tackle the challenges of maintaining agility in a growing company, the significance of customer feedback in refining focus, and the strategic balance between expanding product lines and concentrating on core offerings. Henrique emphasizes the value of money for personal and business growth, the role of ego in decision-making, and the aspiration for Brex to be the financial operating system that empowers businesses to succeed through speed and efficiency.

• Henrique is the founder and CEO of Brex, a financial systems company.
• Brex aims to help growing companies realize their full potential.
• Henrique has successfully raised over $1.1 billion for Brex.
• Investors include Ribbit, Green Oaks, DST, IVP, Caffeinated Capital, and Elad Gil.
• Henrique is also a board member at Mercado Libre.
• Prior to Brex, Henrique co-founded Pagami and scaled it before selling in 2016.

"I'm thrilled to welcome back a friend in the form of Henrique, founder and CEO at Brex, the company reimagining financial systems so every growing company can realize its full potential."

This quote introduces Henrique and the mission of his company, Brex, which is to transform financial systems for growing companies.

• The venture capital landscape is increasingly competitive.
• CoreSignal provides high-quality alternative data to help investors.
• CoreSignal's data sets offer a comprehensive view of companies or industries.
• Squarespace offers an all-in-one platform for online business presence.
• Squarespace features include mobile optimization, email campaigns, and SEO tools.
• AngelList is a key platform for managing investments and simplifies fund management.
• AngelList Stack is a new product for founders, streamlining incorporation, banking, cap table, and fundraising.

"In an increasingly competitive venture capital landscape, it's more important than ever to have the right data to keep your edge."

This quote emphasizes the importance of having access to the right data in a competitive venture capital environment.

• Henrique and his co-founder Pedro are from Brazil.
• They started a payments company in Brazil, which was sold to a larger firm.
• They moved to the U.S. and continued in B2B financial services.
• They identified a problem where startups with funding couldn't get corporate credit cards.
• Brex was founded to solve this issue, starting with a card for SaaS and AWS bills in 2017.

"The problem that we saw that we were trying to solve is the fact that startups had raised a lot of money and couldn't get a corporate credit card."

This quote explains the initial problem that Brex was created to solve for startups.

• Henrique believes in being authentic to oneself as a CEO.
• He learned from Evan Spiegel that authenticity is crucial for a CEO.
• Henrique has ADHD and initially felt insecure about not reading as much as other CEOs.
• He tried to adapt by taking medication to read more but realized it affected other strengths.
• Embracing his strengths and learning through people became his strategy.
• Henrique's biggest mistake was trying to pattern match with people too different from him.

"The most important thing about being a CEO is being authentic to yourself."

This quote from Evan Spiegel, shared by Henrique, highlights the importance of authenticity in leadership.

• Henrique's realization came during a New Year's discussion about books read.
• After trying medication to improve reading, he found it affected other abilities.
• He stopped medicating and focused on his strengths, which led to better outcomes.
• The realization helped him embrace his unique leadership style.

"I realized after trying to live like someone else with the medication, that I was like, oh, okay. Actually, what got me here is my strength, and I should double down on that."

Henrique shares his personal experience of self-realization and the importance of focusing on one's strengths.

• Henrique's insecurity was around not enjoying the management aspect of being a CEO.
• He and his co-founder Pedro found a balance with Henrique focusing on external CEO roles and Pedro on internal CEO roles.
• This partnership allowed them to play to their strengths and manage their insecurities.

"How can you be a CEO if you don't like managing people? That seems like a core part of the job."

Henrique expresses his insecurity about a fundamental aspect of being a CEO, which is managing people.

• Henrique reflects on hiring mistakes, particularly hiring executives from big companies too early.
• He learned that such hires might not be ready to roll up their sleeves in a startup environment.
• He refers to a concept from a book about the role being a university, highlighting the importance of previous experiences shaping a person's ability to adapt to new roles.

"On reflection, I think executives that only had worked at big companies and I think we were probably too early for them."

Henrique discusses the challenges and mistakes made when hiring executives from large companies for a startup.

• Importance of hiring individuals who can quickly adapt to changes in strategy and direction.
• Challenges faced when team members are unable to keep up with rapid organizational changes.

"We need people who are very fast to change and pivot, because if we're changing strategies, changing direction, evolving, we need someone who's very fast."

This quote emphasizes the need for adaptable team members who can swiftly pivot as the company evolves, highlighting the difficulty in sustaining momentum with those who cannot adapt as quickly.

• Strategies to evaluate a candidate's ability to adapt and execute quickly before hiring.
• Importance of examining a candidate's past experiences for signs of adaptability.

"I think it's looking through the experiences, even if they're at a big company, has to take something off the ground. Or were they always handed something that was already working and just say optimize it, make it better?"

This quote suggests that the key to assessing a candidate's adaptability lies in reviewing their past experiences to determine if they have a history of initiating projects or merely optimizing existing ones.

• Approaching investor relationships with confidence and assertiveness.
• Balancing investor advice with the founders' vision and accountability.

"We always manage our investors. It's like, look, you're betting on us to make the right decisions. I want your opinion and I want your support, but this is our company and we're going to make what we think is best."

Henrique stresses the importance of managing investors effectively by seeking their input while maintaining the autonomy to make final decisions, as the founders ultimately bear the responsibility for those decisions.

• Criteria for hiring top-tier executives, such as experience in both B2B and consumer sectors.
• The significance of finding executives who can balance product development with sales and marketing responsibilities.

"We wanted someone who had experience in kind of like doing both. So that's, I think, one of the main reasons we hired him."

Henrique explains the rationale behind hiring a CPO with diverse experience, which aligns with the company's needs to cater to different stakeholders within their product offerings.

• The challenge of preserving a company's agility as it grows larger.
• The negative impact of processes implemented to prevent rare but costly mistakes.

"That's how companies get slow. And honestly, that is a problem that we started experiencing. We saw so many of our customers experiencing, and we decided to honestly start building products to solve it because it was kind of like our own need."

Henrique describes how implementing processes to prevent infrequent, high-cost errors can inadvertently slow down the entire organization, leading to the development of products aimed at addressing this issue.

• Considering the cost of organizational slowdown when implementing new processes.
• Distinguishing between necessary processes for critical issues and overbearing ones for minor problems.

"I think the cost is considering the cost of slowing down the organization as a counterbalance to the process."

Henrique discusses the importance of weighing the cost of implementing processes against the potential slowdown they may cause, advocating for a balanced approach that considers the severity of the issue being addressed.

• Launching a product called Empower to improve the employee expense process.
• Creating a positive cycle by enhancing employee and manager experiences with automated compliance.

"We're launching this product just to give you some context called empower. The thesis behind the product is by making the employee experience better around expenses, that actually increases compliance."

Henrique introduces a new product designed to streamline the expense process, which is based on the premise that improving the user experience will naturally lead to better compliance.

• Addressing competition from companies like Ramp with innovative solutions.
• Reflecting on competitor strategies and adapting accordingly.

"Ramp was always like, something super interesting for us because it was the first competitor that was like an insurgent."

Henrique acknowledges the competitive landscape and the need to consider and respond to the strategies of emerging competitors like Ramp.

• Henrique discusses the initial assumption about customer concerns regarding spending and credit card bills.
• Actual customer feedback revealed that the primary issue was not about reducing expenses but about the speed and efficiency of their operations.
• Customers expressed frustration with bureaucratic processes that slowed them down and made employees feel distrusted.
• This feedback led to a shift in focus for the company, prioritizing helping companies move faster rather than just reducing expenses.

"And when we actually talked to them, what they said is like, yeah, I can reduce my credit card bill for 5%. That doesn't change my business. That doesn't change my life."

This quote emphasizes that a minor reduction in expenses was not a significant concern for customers, which was a critical insight for the company.

"The problem is becoming big and slow. It's exactly what you said. The more people I hire, the slower I am."

Customers are more concerned about the inefficiency and sluggishness that comes with scaling up, which directly impacts their business operations.

"I hate being the person that implements a process that prevents people from doing good work."

The quote reflects a customer's desire to facilitate productivity and positive work experiences rather than hinder them with excessive processes.

• Henrique reflects on the importance of a clear and simple message in product marketing.
• As Brex grew, they expanded their offerings and target markets, which led to a complicated message.
• The company is now refocusing on a simple, core message that emphasizes helping companies move faster.

"Brex is the corporate card for startups. Absolutely. No question what we do and who do we do it for."

This quote highlights the effectiveness of a straightforward and unambiguous marketing message.

"I think the way we think about the world today is we are going to help your company move faster."

Henrique outlines the current focus of their product marketing strategy, which is centered on speed and efficiency for their customers.

• Henrique advises founders to expand their product line when the new product enhances the existing one and targets the same customer base.
• He warns against expanding to new customers with a new product, as it is akin to starting a new company.
• Henrique admits to overestimating their execution ability when Brex expanded, leading to a loss of focus.

"I think that if you're expanding to it's the same customer that you're serving with a product that makes your current product better because that product exists."

This quote suggests that product expansion should be complementary and serve the existing customer base to be successful.

"Focus is super important."

The importance of maintaining focus is highlighted as a key factor in successful execution and avoiding the dilution of company efforts.

• Henrique emphasizes the importance of regular customer engagement to build conviction and understand priorities.
• He admits that there was a period when he neglected customer engagement due to other pressing business matters.
• Customer conversations led to a renewed focus and clarity on the company's priorities.

"And I think it's only by talking to customers that you build real conviction."

Engaging with customers is crucial for gaining insights and making informed decisions about the company's direction.

• Eric Schmidt's advice to Henrique was to focus on what generates 90% of revenue.
• Companies should cut out what's not working and concentrate on successful areas.
• Henrique suggests making strategic decisions sequentially rather than in parallel.

"Just cut out the rest and focus on that."

This quote advises companies to eliminate unsuccessful ventures and dedicate resources to areas that are performing well.

• Henrique shares insights from his experience on the board of another company, highlighting the focus on product and strategy.
• He contrasts this with other boards that focus on market reactions and share prices.
• His board experience has influenced how he values external perspectives and approaches board management at Brex.

"It's all product and strategy, product and strategy, product and strategy."

This quote illustrates the board's focus on core aspects of the business rather than external market factors.

"I think I'm now more open to people from the outside that are seeing things and sharing with me that I may not seeing."

Henrique acknowledges the value of external insights and how they can contribute to the company's understanding and strategy.

• The concept of money and its role evolves with personal and company growth.
• Initially, money is viewed as a scarce resource that must be saved and preserved.
• As stability is achieved, money becomes a tool for growth and investment in experiences and learning.
• The relationship with money is both personal and applicable to business, where it fuels growth.

"I think for me, both in the company and personally, I think it changed over time. Coming from Brazil, money was very scarce, right? Both personally and in the company, saving it and preserving it. And it was the main thing, hey, let's make sure it doesn't run out. And that was the sentiment. So I need to accumulate money to save. So I have this peace of mind, right? I have this insurance that things are going to go up and then we grow and we get to a point where, look, yeah, we have many years. We're not going to not pay our credit card next month. Right. And I think the best use of money is growth, both for the company and personally."

This quote explains the shift in perspective from viewing money as a scarce resource that needs to be hoarded to seeing it as a means to facilitate growth and stability.

• Post-pandemic work-from-home culture has led to lifestyle changes and new forms of investment.
• Investing in a personal chef has significantly improved health and well-being.
• Spending on things that contribute to personal growth or enjoyment is seen as a valuable investment.

"I think after work from home, before it didn't make sense, but after work, from home, having a chef changed my life completely. I eat so healthy and before COVID I was like serving off, driving off delivery is like cold and it's hard. And I think that now, I think my health increased a lot because of it. So I think it's the best investment."

The quote highlights the positive impact of investing in a personal chef on health and lifestyle, especially in the context of remote work arrangements.

• Ego can be a problem from a young age, especially with early success and public recognition.
• Recognizing that no one is immune to ego issues is crucial.
• Establishing systems and having trusted individuals to provide checks and balances is essential for ego management.
• Smart people often rationalize decisions post-facto, so having "rational angels" to question motivations is important.

"Totally. And look, man, I've been having this problem since I'm 14, right? Like, first time I was in the press in Brazil saying I'm the genius and the next whatever, I was 14. And you have all these smart people and journalists, you start believing it, right? You're like, okay, I believe it. I think the important piece about ego is like understanding that you're not immune. It can happen to you, right? You can think you're too much of yourself. So I think about it. How do I build the systems and checks and balances that if that is the case, I have people and systems around me that keep me on check and tell me if it's happening?"

This quote explains the speaker's personal experience with ego from a young age and the importance of recognizing one's vulnerability to ego problems, as well as creating mechanisms for accountability.

• Over time, there has been a shift from purely rational decision-making to more intuitive approaches.
• Decisions made from the heart have historically been more successful for the speaker.
• The speaker acknowledges the difficulty in balancing rational justifications with genuine motivations.

"I become more intuitive over time. I used to be very focused on rationality and how to become more rational. I'm like, less that now. Historically, all of the heart decisions have been better than the head decisions. So I would say more heart."

The quote reflects the speaker's personal evolution towards trusting intuition over purely rational analysis when making decisions.

• Favorite books include "Innovator's Solution" for business and "Atomic Habits" for life.
• Maintaining focus is the hardest element of the speaker's role due to limited time and numerous company activities.
• The speaker desires a more distributed startup world.
• The speaker wishes to be described by the team as compassionate, trustworthy, energetic, thoughtful, and crazy.
• Acknowledges ego issues as a personal weakness and relies on systems to manage them.
• Envisions Brex as the financial operating system for businesses worldwide, aiming to help companies move faster and win.

"I think Brex is the financial operating system for businesses around the world, number one. And I would love to in ten years. People know that it's a reality that if you use Brex, your company moves a lot faster and you win. I think that's what I would love to give Rex to do. It's like if you use Brex, you will win because you're going to move faster. If that's true and we're helping a lot of our customers win, I think that's winning for us."

The quote outlines the speaker's vision for Brex and its role in accelerating the success of its customers, which in turn defines the company's success.